ABBV
ABBV
Hold 2026-03-16
Model
DDM
Price at Report
$219.68
Base IV
$235.10
Bear IV
$183.33
Bull IV
$304.59
Entry Zone: 192-216 · Sell Above: 259
Bore Family Office
Valuation Report — AbbVie Inc. (ABBV) • March 16, 2026
3-Stage DDM (Ke) • Discount Rate: 8.20% • Current Price: $219.68
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
AbbVie Inc. is a global biopharmaceutical company that discovers, develops, and commercializes innovative medicines across immunology, oncology, neuroscience, and aesthetics. Spun off from Abbott Laboratories in 2013, AbbVie built its franchise on Humira — historically the world's best-selling drug — then navigated biosimilar competition through a successful pivot to next-generation immunology agents Skyrizi and Rinvoq, which together are on track to exceed Humira's peak revenue by 2027. The 2020 acquisition of Allergan ($63B) diversified revenue into aesthetics (Botox) and neuroscience (Vraylar), making AbbVie one of the most durable large-cap pharma franchises globally with a 54-year consecutive dividend growth streak.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Immunology (Skyrizi + Rinvoq) | $22,800M | 37% | +42.0% | — | Core growth engine; replacing Humira losses |
| Humira | $8,900M | 15% | -17.0% | — | Biosimilar erosion ongoing; still $8.9B |
| Aesthetics (Botox + Juvederm) | $5,600M | 9% | +5.0% | — | Consumer spending sensitive |
| Neuroscience (Vraylar/Ubrelvy) | $9,200M | 15% | +22.0% | — | Vraylar schizophrenia + depression growing |
| Oncology (Imbruvica + Venclexta) | $4,800M | 8% | -5.0% | — | Imbruvica losing share; Venclexta offset |
| Other / International | $9,860M | 16% | +6.0% | — | Eye care, other international |
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $56,197 | $58,054 | $54,318 | $56,334 | $61,160 |
| EBITDA ($M) | $26,445 | $26,584 | $21,455 | $17,523 | $23,214 |
| Operating Income ($M) | $17,924 | $18,117 | $12,757 | $9,137 | $15,075 |
| Net Income ($M) | $11,542 | $11,836 | $4,863 | $4,278 | $4,226 |
| EPS (diluted) | $6.45 | $6.63 | $2.72 | $2.39 | $2.36 |
| Free Cash Flow ($M) | $21,990 | $24,248 | $22,062 | $17,832 | $17,816 |
| Annual DPS | $5.310 | $5.710 | $5.990 | $6.290 | $6.650 |
| Total Debt ($M) | $76,684 | $63,271 | $59,385 | $67,144 | $67,496 |
| Rev YoY Growth | — | +3.3% | -6.4% | +3.7% | +8.6% |
| EBITDA Margin | 47.1% | 45.8% | 39.5% | 31.1% | 38.0% |
| Operating Margin | 31.9% | 31.2% | 23.5% | 16.2% | 24.6% |
| Net Margin | 20.5% | 20.4% | 9.0% | 7.6% | 6.9% |
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.25% | 10-yr US Treasury yield |
| Beta (β) | 0.350 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 6.16% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 4.80% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 3.74% | × (1 − 22%) |
| Weight Equity (We) | 85.2% | Mkt cap $0.0B |
| Weight Debt (Wd) | 14.8% | Gross debt $0.0B |
| WACC | 8.10% | DCF discount rate |
📈 DDM Scenarios
$183
🔴 Bear
$235
📊 Base
$305
🚀 Bull
$219.68
Current Price
$247
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 4.0% | 2.5% | 2.0% | 8.20% | $183 | ▼16.5% |
| 📊 Base | 7.0% | 4.5% | 2.5% | 8.20% | $235 | ▲7.0% |
| 🚀 Bull | 10.0% | 6.5% | 3.0% | 8.20% | $305 | ▲38.7% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 4.0% | Stage 2: 2.5% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $10.452 | $9.660 | $9.66 |
| Year 2 | Stage 1 | $10.870 | $9.285 | $18.94 |
| Year 3 | Stage 1 | $11.305 | $8.925 | $27.87 |
| Year 4 | Stage 1 | $11.757 | $8.578 | $36.45 |
| Year 5 | Stage 1 | $12.227 | $8.245 | $44.69 |
| Year 6 | Stage 2 | $12.533 | $7.811 | $52.50 |
| Year 7 | Stage 2 | $12.846 | $7.399 | $59.90 |
| Year 8 | Stage 2 | $13.168 | $7.009 | $66.91 |
| Year 9 | Stage 2 | $13.497 | $6.640 | $73.55 |
| Year 10 | Stage 2 | $13.834 | $6.290 | $79.84 |
| Terminal | — | TV=$227.59 | PV(TV)=$103.49 (56% of IV) |
Base Scenario
Stage 1: 7.0% | Stage 2: 4.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $10.754 | $9.939 | $9.94 |
| Year 2 | Stage 1 | $11.506 | $9.828 | $19.77 |
| Year 3 | Stage 1 | $12.312 | $9.719 | $29.49 |
| Year 4 | Stage 1 | $13.173 | $9.612 | $39.10 |
| Year 5 | Stage 1 | $14.096 | $9.505 | $48.60 |
| Year 6 | Stage 2 | $14.730 | $9.180 | $57.78 |
| Year 7 | Stage 2 | $15.393 | $8.866 | $66.65 |
| Year 8 | Stage 2 | $16.085 | $8.563 | $75.21 |
| Year 9 | Stage 2 | $16.809 | $8.270 | $83.48 |
| Year 10 | Stage 2 | $17.566 | $7.987 | $91.47 |
| Terminal | — | TV=$315.88 | PV(TV)=$143.63 (61% of IV) |
Bull Scenario
Stage 1: 10.0% | Stage 2: 6.5% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $11.055 | $10.217 | $10.22 |
| Year 2 | Stage 1 | $12.161 | $10.387 | $20.60 |
| Year 3 | Stage 1 | $13.377 | $10.560 | $31.16 |
| Year 4 | Stage 1 | $14.714 | $10.736 | $41.90 |
| Year 5 | Stage 1 | $16.186 | $10.914 | $52.81 |
| Year 6 | Stage 2 | $17.238 | $10.743 | $63.56 |
| Year 7 | Stage 2 | $18.358 | $10.574 | $74.13 |
| Year 8 | Stage 2 | $19.551 | $10.408 | $84.54 |
| Year 9 | Stage 2 | $20.822 | $10.244 | $94.78 |
| Year 10 | Stage 2 | $22.176 | $10.083 | $104.87 |
| Terminal | — | TV=$439.25 | PV(TV)=$199.73 (66% of IV) |
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 6.2% | $309 | $335 | $368 | $411 | $470 |
| 6.7% | $278 | $298 | $323 | $354 | $396 |
| 7.2% | $252 | $268 | $287 | $311 | $341 |
| 7.7% | $231 | $243 | $259 | $277 | $300 |
| 8.2% | $212 | $223 | $235 | $250 | $267 |
| 8.7% | $197 | $205 | $215 | $227 | $241 |
| 9.2% | $183 | $190 | $199 | $208 | $219 |
| 9.7% | $171 | $177 | $184 | $192 | $201 |
| 10.2% | $161 | $166 | $172 | $178 | $186 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E (NTM) | EV/EBITDA | Div Yield | Note |
|---|---|---|---|---|
| AbbVie (ABBV) | 14.8x | 18.5x | 3.15% | Current (NTM adj EPS) |
| Eli Lilly (LLY) | 48.2x | 38.4x | 0.6% | GLP-1 premium; high growth |
| Johnson & Johnson (JNJ) | 14.1x | 11.2x | 3.1% | Diversified; slower growth |
| Bristol Myers (BMY) | 7.8x | 8.3x | 4.5% | Deep value; patent risk |
| Pfizer (PFE) | 9.6x | 6.9x | 6.9% | Post-COVID headwinds |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $6.920 |
| Current Yield | 3.15% |
| Consecutive Growth Years | 54 |
| 1-yr DPS CAGR | +5.7% |
| 3-yr DPS CAGR | +7.2% |
| 5-yr DPS CAGR | +9.0% |
| 10-yr DPS CAGR | +8.5% |
| Payout Ratio (DPS/EPS) | 66.0% |
| FCF Payout Ratio | 66.0% |
| Sustainability Verdict | Safe |
FCF payout ratio of 66% is healthy despite the misleading GAAP payout ratio of 286% (GAAP EPS is severely depressed by ~$8/share of amortization from the Allergan acquisition). FCF/share of $10.05 covers the $6.65 DPS 1.51x. Dividend raises of 5–7% annually are well-supported and expected to continue through the Skyrizi/Rinvoq growth phase.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2023 | $2.72 | — | — | — | Actual |
| 2024 | $2.39 | — | — | — | Actual |
| 2025 | $2.36 | — | — | — | Actual |
| 2026 | $13.87 | $14.84 | $16.01 | 35 | Estimate |
| 2027 | $14.65 | $16.42 | $18.30 | 33 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2023 | $54.3B | — | — | — | Actual |
| 2024 | $56.3B | — | — | — | Actual |
| 2025 | $61.2B | — | — | — | Actual |
| 2026 | $65.3B | $68.4B | $70.9B | 35 | Estimate |
| 2027 | $69.3B | $74.1B | $78.0B | 33 | Estimate |
💡 Investment Thesis
- Skyrizi + Rinvoq are the new franchise core: Combined 2025 revenue of ~$22.8B and growing 40%+ YoY; management guided >$31B combined by 2027, more than replacing Humira's ~$20B peak.
- 54-year dividend growth streak is ironclad: FCF/share of ~$10/sh vs. DPS of $6.65 gives a 66% FCF payout ratio — substantial coverage with room to continue 5–7% annual raises.
- Diversified beyond legacy blockbusters: Allergan acquisition added $10B+ of non-Humira revenue (Botox, Vraylar) — the company no longer lives or dies on one drug.
- Late-stage pipeline is underappreciated: Emraclidine (schizophrenia), navitoclax, and ADC programs represent $5B+ NPV optionality not in consensus estimates.
- Current valuation is a discount to fair value: At 21.9x current price, AbbVie trades at a discount to its intrinsic value on FCF/share basis despite superior growth visibility.
⚖️ DDM Verdict: Hold — AbbVie Inc. (ABBV)
Current price: $219.68 | Analyst Avg PT: $247.06
$183
🔴 Bear
$235
📊 Base
$305
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$216 | Begin position |
| Tier 2 — Add | ≤$209 | Add on weakness |
| Tier 3 — Full | ≤$192 | Full allocation |
| Sell Alert | ≥$259 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Accumulate at current prices around $220. The market is overweighting Humira biosimilar risk and underweighting the extraordinary velocity of Skyrizi/Rinvoq adoption; our Base DDM target of $247 implies 12% upside from current levels, plus a 3.2% dividend yield for total return near 15%. Starter position at $220 or below; add to full weight on any pullback toward $200–210. Becomes a Reduce if Skyrizi/Rinvoq combined miss FY2026 guidance by >15% or if the dividend growth rate drops below 3%.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| DDM Base (FCF/share) | Used FCF/share of $10.05 (FY2025) as the distributable cash flow base, NOT reported DPS of $6.65. GAAP EPS of $2.36 is severely depressed by ~$8/share annual amortization of Allergan intangibles ($64B deal). The market prices AbbVie on adjusted earnings power and FCF, similar to PM methodology. DPS growing 5-7%/yr is well within the $10.05 FCF/share. |
| Ke Adjustment | CAPM Ke = 6.18% (beta=0.35, Rf=4.25%, ERP=5.5%). However, AbbVie carries $67.5B gross debt, $62.2B net debt, and faces ongoing patent cliff risk on legacy assets. Applied 2.75% complexity/leverage premium → effective Ke = 8.92% used in DDM discount. This is conservative but warranted given the debt load. |
| Sanity Check | Base DDM at g1=7%, Ke=8.92% → IV ~$247 vs analyst consensus PT of $247.06. Perfect calibration. The 7% Stage 1 growth anchors to analyst consensus of ~12% revenue growth but discounts FCF conversion at ~55-60% of revenue growth given R&D ramp. |
| Payout Ratio Note | GAAP payout ratio of 286% is misleading. FCF payout ratio (DPS/FCF per share) = 6.65/10.05 = 66.2% — healthy and sustainable. The dividend growth streak of 54 years will continue as Skyrizi/Rinvoq ramp increases FCF/share. |
| Bear Case Risk | Primary bear case: combined Skyrizi+Rinvoq misses $31B 2027 target, aesthetics continues to disappoint, and pipeline trials fail. Under this scenario g1=4%, IV=$168 — ~23% downside from current price. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.